Will Big Business Save the Earth?

7 Dec 2009

December 6,
2009

OP-ED
CONTRIBUTOR

Will Big Business Save the
Earth?

By JARED
DIAMOND

Los Angeles

THERE is a
widespread view, particularly among environmentalists and liberals, that big
businesses are environmentally destructive, greedy, evil and driven by
short-term profits. I know -- because I used to share that view.

But today I have
more nuanced feelings. Over the years I've joined the boards of two
environmental groups, the World Wildlife Fund and Conservation International,
serving alongside many business executives.

As part of my
board work, I have been asked to assess the environments in oil fields, and have
had frank discussions with oil company employees at all levels. I've also worked
with executives of mining, retail, logging and financial services companies.
I've discovered that while some businesses are indeed as destructive as many
suspect, others are among the world's strongest positive forces for
environmental sustainability.

The embrace of
environmental concerns by chief executives has accelerated recently for several
reasons. Lower consumption of environmental resources saves money in the short
run. Maintaining sustainable resource levels and not polluting saves money in
the long run. And a clean image -- one attained by, say, avoiding oil spills and
other environmental disasters -- reduces criticism from employees, consumers and
government.

What's my evidence
for this? Here are a few examples involving three corporations -- Wal-Mart,
Coca-Cola and Chevron -- that many critics of business love to hate, in my
opinion, unjustly.

Let's start with
Wal-Mart. Obviously, a business can save money by finding ways to spend less
while maintaining sales. This is what Wal-Mart did with fuel costs, which the
company reduced by $26 million per year simply by changing the way it managed
its enormous truck fleet. Instead of running a truck's engine all night to heat
or cool the cab during mandatory 10-hour rest stops, the company installed small
auxiliary power units to do the job. In addition to lowering fuel costs, the
move eliminated the carbon dioxide emissions equivalent to taking 18,300
passenger vehicles off the road.

Wal-Mart is also
working to double the fuel efficiency of its truck fleet by 2015, thereby saving
more than $200 million a year at the pump. Among the efficient prototypes now
being tested are trucks that burn biofuels generated from waste grease at
Wal-Mart's delis. Similarly, as the country's biggest private user of
electricity, Wal-Mart is saving money by decreasing store energy use.

Another Wal-Mart
example involves lowering costs associated with packaging materials. Wal-Mart
now sells only concentrated liquid laundry detergents in North America, which
has reduced the size of packaging by up to 50 percent. Wal-Mart stores also have
machines called bailers that recycle plastics that once would have been
discarded. Wal-Mart's eventual goal is to end up with no packaging waste.

One last Wal-Mart
example shows how a company can save money in the long run by buying from
sustainably managed sources. Because most wild fisheries are managed
unsustainably, prices for Chilean sea bass and Atlantic tuna have been soaring.
To my pleasant astonishment, in 2006 Wal-Mart decided to switch, within five
years, all its purchases of wild-caught seafood to fisheries certified as
sustainable.

Coca-Cola's
problems are different from Wal-Mart's in that they are largely long-term. The
key ingredient in Coke products is water. The company produces its beverages in
about 200 countries through local franchises, all of which require a reliable
local supply of clean fresh water.

But water supplies
are under severe pressure around the world, with most already allocated for
human use. The little remaining unallocated fresh water is in remote areas
unsuitable for beverage factories, like Arctic Russia and northwestern
Australia.

Coca-Cola can't
meet its water needs just by desalinizing seawater, because that requires
energy, which is also increasingly expensive. Global climate change is making
water scarcer, especially in the densely populated temperate-zone countries,
like the United States, that are Coca-Cola's main customers. Most competing
water use around the world is for agriculture, which presents sustainability
problems of its own.

Hence Coca-Cola's
survival compels it to be deeply concerned with problems of water scarcity,
energy, climate change and agriculture. One company goal is to make its plants
water-neutral, returning to the environment water in quantities equal to the
amount used in beverages and their production. Another goal is to work on the
conservation of seven of the world's river basins, including the Rio Grande,
Yangtze, Mekong and Danube -- all of them sites of major environmental concerns
besides supplying water for Coca-Cola.

The third company
is Chevron. Not even in any national park have I seen such rigorous
environmental protection as I encountered in five visits to new Chevron-managed
oil fields in Papua New Guinea. (Chevron has since sold its stake in these
properties to a New Guinea-based oil company.) When I asked how a publicly
traded company could justify to its shareholders its expenditures on the
environment, Chevron employees and executives gave me at least five reasons.

First, oil spills
can be horribly expensive: it is far cheaper to prevent them than to clean them
up. Second, clean practices reduce the risk that New Guinean landowners become
angry, sue for damages and close the fields. (The company has been sued for
problems in Ecuador that Chevron inherited when it merged with Texaco in 2001.)
Next, environmental standards are becoming stricter around the world, so
building clean facilities now minimizes having to do expensive retrofitting
later.

Also, clean
operations in one country give a company an advantage in bidding on leases in
other countries. Finally, environmental practices of which employees are proud
improve morale, help with recruitment and increase the length of time employees
are likely to remain at the company.

In view of all
those advantages that businesses gain from environmentally sustainable policies,
why do such policies face resistance from some businesses and many politicians?
The objections often take the form of one-liners.

• We have to balance the environment against the economy. The
assumption underlying this statement is that measures promoting environmental
sustainability inevitably yield a net economic cost rather than a profit. This
line of thinking turns the truth upside down. Economic reasons furnish the
strongest motives for sustainability, because in the long run (and often in the
short run as well) it is much more expensive and difficult to try to fix
problems, environmental or otherwise, than to avoid them at the outset.

Americans learned
that lesson from Hurricane Katrina in August 2005, when, as a result of
government agencies balking for a decade at spending several hundred million
dollars to fix New Orleans's defenses, we suffered hundreds of billions of
dollars in damage -- not to mention thousands of dead Americans. Likewise, John
Holdren, the top White House science adviser, estimates that solving problems of
climate change would cost the United States 2 percent of our gross domestic
product by the year 2050, but that not solving those problems would damage the
economy by 20 percent to 30 percent of G.D.P.

• Technology will solve our problems. Yes, technology can
contribute to solving problems. But major technological advances require years
to develop and put in place, and regularly turn out to have unanticipated side
effects -- consider the destruction of the atmosphere's ozone layer by the
nontoxic, nonflammable chlorofluorocarbons initially hailed for replacing
poisonous refrigerant gases.

• World population growth is leveling off and won't be the problem
that we used to fear. It's true that the rate of world population growth
has been decreasing. However, the real problem isn't people themselves, but the
resources that people consume and the waste that they produce. Per-person
average consumption rates and waste production rates, now 32 times higher in
rich countries than in poor ones, are rising steeply around the world, as
developing countries emulate industrialized nations' lifestyles.

• It's futile to preach to us Americans about lowering our standard
of living: we will never sacrifice just so other people can raise their standard
of living. This conflates consumption rates with standards of living:
they are only loosely correlated, because so much of our consumption is wasteful
and doesn't contribute to our quality of life. Once basic needs are met,
increasing consumption often doesn't increase happiness.

Replacing a car
that gets 15 miles per gallon with a more efficient model wouldn't lower one's
standard of living, but would help improve all of our lives by reducing the
political and military consequences of our dependence on imported oil. Western
Europeans have lower per-capita consumption rates than Americans, but enjoy a
higher standard of living as measured by access to medical care, financial
security after retirement, infant mortality, life expectancy, literacy and
public transport.

NOT surprisingly,
the problem of climate change has attracted its own particular crop of
objections.

• Even experts disagree about the reality of climate
change. That was true 30 years ago, and some experts still disagreed a
decade ago. Today, virtually every climatologist agrees that average global
temperatures, warming rates and atmospheric carbon dioxide levels are higher
than at any time in the earth's recent past, and that the main cause is
greenhouse gas emissions by humans. Instead, the questions still being debated
concern whether average global temperatures will increase by 13 degrees or
"only" by 4 degrees Fahrenheit by 2050, and whether humans account for 90
percent or "only" 85 percent of the global warming trend.

• The magnitude and cause of global climate change are uncertain. We
shouldn't adopt expensive countermeasures until we have certainty. In
other spheres of life -- picking a spouse, educating our children, buying life
insurance and stocks, avoiding cancer and so on -- we admit that certainty is
unattainable, and that we must decide as best we can on the basis of available
evidence. Why should the impossible quest for certainty paralyze us solely about
acting on climate change? As Mr. Holdren, the White House adviser, expressed it,
not acting on climate change would be like being "in a car with bad brakes
driving toward a cliff in the fog."

• Global warming will be good for us, by letting us grow crops in
places formerly too cold for agriculture. The term "global warming" is a
misnomer; we should instead talk about global climate change, which isn't
uniform. The global average temperature is indeed rising, but many areas are
becoming drier, and frequencies of droughts, floods and other extreme weather
events are increasing. Some areas will be winners, while others will be losers.
Most of us will be losers, because the temperate zones where most people live
are becoming drier.

•It's useless for the United States to act on climate change, when
we don't know what China will do. Actually, China will arrive at this
week's Copenhagen climate change negotiations with a whole package of measures
to reduce its "carbon intensity."

While the United
States is dithering about long-distance energy transmission from our rural areas
with the highest potential for wind energy generation to our urban areas with
the highest need for energy, China is far ahead of us. It is developing
ultra-high-voltage transmission lines from wind and solar generation sites in
rural western China to cities in eastern China. If America doesn't act to
develop innovative energy technology, we will lose the green jobs competition
not only to Finland and Germany (as we are now) but also to China.

On each of these
issues, American businesses are going to play as much or more of a role in our
progress as the government. And this isn't a bad thing, as corporations know
they have a lot to gain by establishing environmentally friendly business
practices.

My friends in the
business world keep telling me that Washington can help on two fronts: by
investing in green research, offering tax incentives and passing cap-and-trade
legislation; and by setting and enforcing tough standards to ensure that
companies with cheap, dirty standards don't have a competitive advantage over
those businesses protecting the environment. As for the rest of us, we should
get over the misimpression that American business cares only about immediate
profits, and we should reward companies that work to keep the planet
healthy.

Jared Diamond, a
professor of geography at the University of California at Los Angeles, is the
author of "Guns, Germs and Steel" and
"Collapse."

1 Comment

Hi, Jaren Diamond

You very well justified your point in the blog above as to the title you so provided. People with money can and few of them are doing a lot for the envronment as you said there are few back here in India even.It solely depends on one's concern not only for the humanity but in certain cases when people think of their business future it somehow turns in the favour of environment so i dont think people with good business be so demeaned rather if they are not working towards the environment then they should be provided with seminars and workshops to influence them to do so and giving them deas is what they buy.

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Covering the game changing discussions that are taking place in the realm of sustainability. From the impact of the City of Fayetteville's decision to switch its fleet to biodiesel to Paul Stamet's research in the Pacific Northwest on how mycelia...